The ERC-20 Ethereum token standard is a blueprint for creating fungible tokens that are compatible with the broader Ethereum network. Ethereum, or ether, is a cryptocurrency that allows for the creation of a variety of applications, including tokens, that don’t require intermediary services to operate, unlike most traditional applications.
The ERC-20 standard has seeped into almost every corner of the crypto ecosystem. A large number of popular tokens, such as the stablecoin tether and leading oracle service Chainlink, are actually ERC-20 tokens under the hood.
ERC-20 tokens are digital assets that can be created by anyone but are mostly made by organizations and tech-focused companies. Each token has its own specific utility, such as granting users the right to vote on decisions impacting the future of a project, or rewarding customers for performing certain tasks. ERC-20 tokens are typically sold via a variety of different offerings as a way to raise early-stage capital for the underlying project. In the past, however, critics have argued that crypto tokens have drawn too much hype, becoming a vehicle for sour investments or straight-up scams. Many of the projects that raised money in the initial coin offering boom of 2017 reportedly failed to provide any returns for their investors.
ERC-20 standardizes the core functionality of each token, meaning that all tokens created using this framework are interoperable